SFA Research Corner: Housing Market Seesaw and Securitizations—Sales Down, Equity Up
article by SFA
The October 2023 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) reports lending standards tightened for all categories of residential real estate loans and HELOCs amidst reduced demand, suggesting challenging times ahead. Tighter lending standards, a preponderance of low-interest rate mortgages, and non-financial pandemic related factors have disincentivized owners from selling or refinancing their homes, depressing origination volumes. With less than two months of the year remaining, non-agency RMBS issuance is on track to end the year 60% below 2022’s annual volume. Soaring home prices, on the other hand, increased home equity in the aggregate to $31 trillion according to the Federal Reserve, supporting interest in RMBX backed by home equity-related collateral.